Are bills for water, sewer, HOA dues and property taxes accruing right now – in your name? Is the City preparing to sue you for letting the yard become overgrown and littered?

If yours was a zombie foreclosure, the answer is yes.

Zombie Foreclosures are one more reason why a short sale is the safest course of action for underwater San Diego homeowners who can no longer keep up with mortgage payments. A short sale the only option that is absolutely over when it’s over.

Here’s what happens in a Zombie foreclosure…

Homeowners who let their homes go into foreclosure often move out after the bank notifies them that the auction date has been set. They assume that on the date specified, ownership will have transferred from them to their lender. Unfortunately, that isn’t always the truth.

Banks do what they believe to be in their own financial best interests – without regard to how their actions will affect homeowners.

That’s why banks, in their quest to avoid costs, sometimes do not complete the foreclosure process. Instead, they postpone the auction date. That lets the bank off the hook for property taxes, city services, and homeowners’ association dues. It also absolves them of responsibility to maintain the house and grounds in keeping with neighborhood standards.

In the $25 billion settlement with the state attorneys general in 2012, the nation’s five largest mortgage lenders agreed to inform borrowers of any decision to forgo or delay a foreclosure. But they don’t always adhere to that promise, and homeowners don’t always read their mail.

And therein lies the nightmare.

Thousands of homeowners who believed that they no longer had any legal interest in their homes are now being presented with bills from cities, counties, and homeowner’s associations – where property taxes, water and sewer services, and dues have not been paid since the homeowner moved away. In some cases, where an abandoned home has been vandalized and/or the properties have been left to the forces of nature, cities are also looking to the homeowner of record to make repairs, clean up the yards, and bring the homes up to neighborhood standards.

It gets worse…

In other cases, the banks take title, then simply don’t do the paperwork correctly. So while the former homeowner believes they’ve been cleared of the debt through the foreclosure, the banks are still reporting to the credit bureaus, claiming thousands of dollars still due and owing. The result is that no matter how well that homeowner has taken care of bills since the foreclosure, their credit scores remain in the gutter.

A second problem rears its ugly head when former homeowners are hit with judgments against them for the 2nd and even 3rd liens against the property. Banks don’t have to take immediate action when they decide to collect, so it could be 2 or 3 years before that former homeowner realizes that his or her secondary liens were not wiped out by the foreclosure.

What’s the solution?

If your home has already been foreclosed upon, check with your county tax assessor’s office to see whether they still show you as owner. Also check with your homeowner’s association to verify that ownership has legally been transferred to the bank. If not, call us for further assistance to determine the outcome. We have access to software and data that is more up to date than the public data banks.

If you’re underwater and behind on payments right now, choose the only SAFE solution: List your San Diego or San Diego County home as a short sale.

The short sale process will absolutely transfer ownership from you to your buyer. In addition, none of your lien holders will be allowed to sue you for a deficiency. When it’s over – it will be over.

You won’t suddenly – 2 or 3 years down the road – find yourself facing Zombies.

You’ll be able to get on with your life, begin rebuilding your credit, and purchase a new home within 2 or 3 short years.

So if you’re behind, call the HaroDunlap Team today. We’ve helped thousands of San Diego homeowners avoid foreclosure – and we’d like to help you too.

This site provides information about real estate, law, income taxes and credit scores as relates to borrowers in distress, short sales and similar situations. The site is designed to help users safely cope with their own needs. Information is not the same as advice — the application of law or regulations to an individual’s specific circumstances. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a lawyer, tax adviser or other specialist if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation. The models in photographs accompanying the testimonials on this website are used for illustrative purposes and are not a personal endorsement.

When HAMP was created in 2009, it was expected to help up to 4 million homeowners avoid foreclosure within the first several months. To date, it has helped approximately 1 million.

Meanwhile, our country saw 4 million foreclosures from 2007 to May of 2012.

Lenders servicing loans owned or guaranteed by Fannie Mae or Freddie Mac are required to participate in the HAMP program. However, the program has been plagued by servicer non-compliance and complete lack of enforcement.

The government promises a financial incentive for servicers who assist homeowners with loan modifications. However, the financial incentives that encourage them to pursue foreclosure are often more appealing.

In addition, HAMP only requires modification of loans which meet the net present value test. This test determines whether the modification will or will not save the investor’s money. If they determine that foreclosure is more profitable, the permanent loan modification will not be granted.

But they take their time in making this determination.

As a result, homeowners who hope to save their homes through a loan modification are often strung along for years, submitting and re-submitting documents, then sometimes being granted a trial modification. All too often, months of making trial modification payments result in a final verdict of “no,” and the house is taken in foreclosure.

Sadly, lenders know from the outset which modifications will be turned down. It’s a simple matter of plugging the numbers into a computer program. We have that program in our office and can tell homeowners within minutes whether pursuing a loan modification is worthwhile.

Private loan modifications report higher numbers, with more than 4.5 million loans modified over the same period of time. Called proprietary loan modifications, these are “in-house” plans that can vary greatly from one situation to the next. Some have adjustable terms that can increase payments in the future. Others have profit sharing terms that bring immediate relief and promise repayment to the bank if there’s a profit on an eventual sale.

Principal reductions are not usually the reality.

Statistics show that principal was reduced in only 17.1% of all loan modifications. In 77.2% the interest rate was reduced, while other modifications simply extended the terms of the loan. One woman reported a less than 10% drop in her payment amount – but an extension from 23 years to 40 years left on her loan.

In more than 10% of the modifications, the monthly payment was not reduced. Actual reductions in monthly payments ranged from zero to as much as 35%.

This site provides information about real estate, law, income taxes and credit scores as relates to borrowers in distress, short sales and similar situations. The site is designed to help users safely cope with their own needs. Information is not the same as advice — the application of law or regulations to an individual’s specific circumstances. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a lawyer, tax adviser or other specialist if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation. The models in photographs accompanying the testimonials on this website are used for illustrative purposes and are not a personal endorsement.

Because the supply of homes for sale in San Diego is now only 43′%* of what it was a year ago, we’re seeing fifteen or twenty buyers competing for each home priced at market value – and many of those buyers have cash in hand. As a result, San Diego homes are now selling, on average, for 101.3% of their listed price.

In a balanced market, homes typically sell for 95% to 98% of list price.

If you owe more than your house is worth in today’s market, now is the time to short sell.

Consider these facts:

• If you offer your house as a short sale now, you’ll have good offers to choose from. You’ll spend less time negotiating with a buyer; and when you present your lender with a solid offer from a well-qualified (or cash) buyer, you’ll increase your chances of getting a speedy and positive response.
• Banks are tightening their regulations with regard to short sales. By next year it may be difficult to short sell if you have any assets at all.
• The tax break on forgiven mortgage debt will expire on December 31, and there is no guarantee that it will be renewed. If you wait, you could end up owing Federal income tax on all that forgiven debt.
• Getting this over and done with now will free you to get on with life – and within 2-3 years you’ll be eligible for a new mortgage loan. (If you let the house go into foreclosure, you’ll wait for 5-7 years.)
• The sooner you close this chapter, the sooner your credit profile will recover.

What can we expect in the coming months?

We have no way of knowing. The pricing recovery feels strong and stable. It appears that it is going to be consistent, with San Diego home prices slowly inching upward. However, this is subject to the fiscal behavior in Washington and the possible occurrence of an international destabilizing event. And those, of course, are factors we can’t predict.

This is a situation that equity sellers should also consider carefully as they weigh their alternatives.

Here are two facts to consider:

• We cannot expect home prices to return to 2005+ levels for many years. For prices to return to that level in the near future, banks would have to return to the liberal lending practices that led to the 2004 explosion in prices. This is not likely to happen.
• The current market presents a unique opportunity for move-up sellers. Due to the law of supply and demand, mid-range homes are increasing in market value faster than high-end homes. Thus, you can still find terrific bargains in San Diego’s high-end luxury home market.

This site provides information about real estate, law, income taxes and credit scores as relates to borrowers in distress, short sales and similar situations. The site is designed to help users safely cope with their own needs. Information is not the same as advice — the application of law or regulations to an individual’s specific circumstances. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a lawyer, tax adviser or other specialist if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation. The models in photographs accompanying the testimonials on this website are used for illustrative purposes and are not a personal endorsement.

*Source: www.zerohedge.com

They’ll do without things, sell their toys, go deeply in debt on their credit cards, and even borrow from family members rather than default on that loan.

So the first step toward loan modification is heart-wrenching as well as financially dangerous. That first step is to stop making payments.

This, the banks say, is the proof they need that you are unable to meet the current payments. It verifies your hardship and makes you eligible for modification.

Unfortunately, it’s also the reason they sometimes use for denying a permanent modification. That is just one of the reasons, however. Some are denied because the bank decides they don’t have enough income to make the reduced payment (even as the homeowner has been faithfully making the reduced payment). In other cases, homeowners were turned down because they took a second job to make ends meet and now their income was a few dollars too high. Another woman, after 3 years of submitting paper after paper after paper, was turned down because she didn’t file the right paper.

The greatest tragedy in the loan modification scam is the emotional and financial toll it takes on entire families.

It’s common for homeowners to struggle for 2, 3, or even more years to try to achieve a loan modification. During this time they’re shifted from one asset manager to another – and required to re-submit documents over and over again. And all this time they don’t know whether they’ll be successful or not.

When at last they’re granted a trial modification, they’re offered hope. In just 3 months they should be granted a permanent modification and life can get back to normal. But no. Even though the guidelines call for just 3 trial payments, they’re often told that there’s a delay – but keep making those trial payments.

One gentleman quoted in laweekly.com said he paid 14 trial payments before Chase decided he didn’t have sufficient income to continue. His attorney is filing a legal challenge.

And he is not alone. According to a lawsuit filed against JPMorgan Chase last May, the bank has “extended, delayed and otherwise hindered” the mortgage modification process in thousands of California cases. The nonprofit Housing and Economic Rights Advocates, who filed the class action suit, contend that the bank has profited from payments borrowers make in temporary modification payments. Then they foreclose.

A spokesman for the group says there’s a dark motive behind this behavior. JPMorgan Chase purchased Washington Mutual loans for pennies on the dollar. They could easily afford to modify these loans and still make windfall profits – but the profits from foreclosure are even greater.

And of course, Chase is not the only bank stringing people along. Complaints about Bank of America, Wells Fargo, and others are rampant on the Internet.

One Bright Spot…

Fannie Mae has recently announced that borrowers and their real estate agents can escalate problems with loan modifications and short sales directly to Fannie Mae, bypassing the asset managers.

We have yet to learn whether escalation leads to success, but it seems like a step in the right direction.

This site provides information about real estate, law, income taxes and credit scores as relates to borrowers in distress, short sales and similar situations. The site is designed to help users safely cope with their own needs. Information is not the same as advice — the application of law or regulations to an individual’s specific circumstances. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a lawyer, tax adviser or other specialist if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation. The models in photographs accompanying the testimonials on this website are used for illustrative purposes and are not a personal endorsement.

Or is “shadow inventory” a term that the media has latched onto and won’t let go?

Perhaps it will be a factor in some parts of the country, but here in San Diego our market is in no danger of being flooded with bank-owned homes that will bring the prices down. Our inventory is down 56.7% from a year ago – so we’d welcome more homes to sell.

And, since Fannie Mae has ownership or control over about half the mortgages in America today, we shouldn’t expect lower prices from bank-owned homes hitting the market.

In fact, right now they’re listing their REO’s above market and offering them for sale through their Home Path program – with no appraisal required. Agents trying to assist buyers who want to use other financing report having trouble getting acceptable appraisals for these over-priced homes.

What we do know: If shadow inventory exists, no one knows what it is.

Some journalists say as many as 10 million homes could be thus classified. Others report that 5,300,000 homes are in some stage of distress. What those reports don’t mention is how many of those homes will either be brought current or sold as short sales.

Others report that about 25% of all U.S. homes are underwater – and they constitute shadow inventory. What they don’t report is that 80% of those underwater homeowners are staying current with their payments.

Our opinion: If the time is right for you to buy or sell, the time is right. “Shadow inventory” may or may not have an impact on San Diego home prices in the future, so don’t allow it to influence your decision.

Regardless of what the national newscasters might tell you, in cities like San Diego, the “buyer’s market” is a thing of the past. Homes are selling faster than they’re coming on the market, and those who seek to get an under market value bargain are finding themselves shut out.

According to San Diego Association of Realtors statistics, the December 2012 sales volume was up more than 29% from December 2011, while the number of homes for sale was down 56.7% and the average days on the market was down nearly 21%, to just 76 days. Fifteen or twenty qualified buyers are competing for every house – and they’re not just competing against other would-be homeowners. They’re competing with investors who purchase with cash.

Serious San Diego home buyers need to confine their search to the price range they can afford; then work with an experienced buyer’s agent with a good reputation in the real estate community.

The Haro-Dunlap team fits that description.

What difference does the agent make? All the difference.

First, we know what our buyers can ask for safely and what will lead to an automatic rejection. Then, we know how to negotiate in a manner that keeps the lines of communication open – thus leading to an agreement.

Next, your agent’s reputation will be a factor when the listing agent presents multiple offers to the home seller. Our offers are looked upon favorably because listing agents know our buyers either have the cash or have been pre-approved for their mortgage loan. They also know that we’ll do our share of the work while behaving in a professional, pleasant, and cooperative manner.

Other San Diego County agents know us and know we deliver results for our clients.

Source:www.zerohedge.com

In California, you’re far better off to choose a short sale. Here’s the real story…

At first glance, the Announcement that starting in March 2013 Fannie Mae and Freddie Mac will let borrowers who are current on their payments sign a “mortgage release” and “wipe out their debt,” sounds good.

But keep reading. While the announcement says they’ll allow on-time borrowers to walk away from their underwater mortgage debt, it goes on to say that only certain homeowners will be eligible. You must first show a valid reason why you need to move. This could be illness or a job change.

And while they use the words “wipe out the mortgage debt,” that only applies to borrowers without financial reserves – and without second mortgages.

Borrowers can be required to pay up to 20% of their financial reserves to help make up the shortfall – or be required to sign a promissory note for future no-interest repayments.

In addition, the second lien holder can demand payment before releasing its lien.

And, since the mortgage release is simply a deed-in-lieu transaction, and will report to the credit bureaus just as if you went through a foreclosure, it’s a pretty hollow victory.

In California, if you short sale instead of waiting for a foreclosure or signing a deed-in-lieu, none

of your lien holders can demand payment for the shortfall.

Our opinion: If you’re a California homeowner with financial assets and/or a second mortgage, you’ll be far better off to short sell the house. You may need to have a few late payments show on your credit report, but you’ll actually walk away free from that mortgage debt. In addition, you’ll be eligible for a new mortgage loan 3 to 5 years sooner.

We have the experience and the negotiating expertise to get your short sale closed. So before you risk your financial future, give us a call.

This site provides information about real estate, law, income taxes and credit scores as relates to borrowers in distress, short sales and similar situations. The site is designed to help users safely cope with their own needs. Information is not the same as advice — the application of law or regulations to an individual’s specific circumstances. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a lawyer, tax adviser or other specialist if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation. The models in photographs accompanying the testimonials on this website are used for illustrative purposes and are not a personal endorsement.

For some California homeowners, this could have meant owing income tax on more than $100,000 in phantom income.

More than a dozen bills extending the Act had been introduced to Congress over the past year, and none of them had made it as far as a vote.

Now those underwater homeowners have been given another year in which to short sell.

As it turns out, extension of this Act was included in HR 8, which passed the House of Representatives on August 1, 2012. This bill, entitled ‘An Act to extend certain tax relief provisions enacted in 2001 and 2003, and to provide for expedited consideration of a bill providing for comprehensive tax reform, and for other purposes’ passed the Senate with amendments at 1:37 a.m. on January 1, 2013,  and was sent back to the House.

One of the revisions to HR 8 was a name change. The newly named bill, which was approved by the House at 10:57 p.m. on January 1, will be known as the ‘American Taxpayer Relief Act of 2012’.

Other home ownership tax breaks extended until December 31, 2013 are:

• The deductions for mortgage interest and mortgage insurance premiums
• The deductions for state and local property taxes, and
• The credits for energy-efficient new homes and energy-efficient appliances.

These mortgage-related extensions were just a few of the tax breaks extended to avert the much-discussed  “Fiscal Cliff.” To learn what else was included, go to govtrack.us http://www.govtrack.us/congress/bills/112/hr8

What about California Income Tax?

Although they have not yet been passed, two bills were introduced in December 2012 that would extend relief for California homeowners.

• Assembly Bill No. 42, introduced by Perea, calls for California to act in compliance with Federal law in this regard.
• Senate Bill No. 30, introduced by Senator Calderon, simply extends the current relief through December 31, 2013.

We’ll be watching for verification that one or the other of these bills had been made into law – so watch this page for updates.

While the term “insolvent” is not one that most of us would like to apply to ourselves, the IRS definition of this term may be the saving grace for thousands of California homeowners whose mortgage debt far exceeds the current value of their homes.

When the Mortgage Debt Relief Act of 2007 expires on December 31, those homeowners who short sell or lose their homes to foreclosure will owe Federal and State income tax on the forgiven debt – UNLESS Congress extends the act or UNLESS the homeowner can qualify for exclusion under “insolvency.”

The following is excerpted from the IRS instructions found at www.irs.gov.

We’ve included official IRS definitions as referenced and found later in their text. Notes in parentheses are ours.
………………………
Insolvency

Do not include a canceled debt in income to the extent that you were insolvent immediately before the cancellation. (emphasis mine – note the date)You were insolvent immediately before the cancellation to the extent that the total of all of your liabilities was more than the FMV of all of your assets immediately before the cancellation. For purposes of determining insolvency, assets include the value of everything you own (including assets that serve as collateral for debt and exempt assets which are beyond the reach of your creditors under the law, such as your interest in a pension plan and the value of your retirement account).

Liabilities include:
• The entire amount of recourse debts,
• The amount of nonrecourse debt that is not in excess of the FMV of the property that is security for the debt, and
• The amount of nonrecourse debt in excess of the FMV of the property subject to the nonrecourse debt to the extent nonrecourse debt in excess of the FMV of the property subject to the debt is forgiven.

You can use the Insolvency Worksheet to help calculate the extent that you were insolvent immediately before the cancellation.

This exclusion does not apply to a cancellation of debt that occurs in a title 11 bankruptcy case. (Unless Congress extends the act, the following qualified principal residence exclusion will be removed for 2013, but it still holds true for 2012.) It also does not apply if the debt is qualified principal residence indebtedness unless you elect to apply the insolvency exclusion instead of the qualified principal residence indebtedness exclusion.

Qualified Principal Residence Indebtedness

You can exclude canceled debt from income if it is qualified principal residence indebtedness. Qualified principal residence indebtedness is any mortgage you took out to buy, build, or substantially improve your main home. It also must be secured by your main home. Qualified principal residence indebtedness also includes any debt secured by your main home that you used to refinance a mortgage you took out to buy, build, or substantially improve your main home, but only up to the amount of the old mortgage principal just before the refinancing.

How to report the insolvency exclusion. To show that you are excluding canceled debt from income under the insolvency exclusion, attach Form 982 to your federal income tax return and check the box on line 1b. On line 2, include the smaller of the amount of the debt canceled or the amount by which you were insolvent immediately before the cancellation. You can use the Insolvency Worksheet, to help calculate the extent that you were insolvent immediately before the cancellation. You must also reduce your tax attributes in Part II of Form 982 as explained under Reduction of Tax Attributes, later.

…………………………………………………

Remember that the insolvency exclusion applies to all forgiven debt. So if you got a reduction on a credit card account in exchange for full payment, or if a credit card company “wrote off” your debt, you’ll owe the income tax if you can’t prove insolvency.

If you’re confused, follow any of the links above and scroll down. You’ll find 3 examples to help clarify the rules.

If you think you may be eligible for tax relief under these IRS rules, please contact your tax professional for further advice.

And if you’d like to explore the possibility of closing before year end using our Cash Short Sale Express, just click here for more information.

This site provides information about real estate, law, income taxes and credit scores as relates to borrowers in distress, short sales and similar situations. The site is designed to help users safely cope with their own needs. Information is not the same as advice — the application of law or regulations to an individual’s specific circumstances. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a lawyer, tax adviser or other specialist if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation. The models in photographs accompanying the testimonials on this website are used for illustrative purposes and are not a personal endorsement.

Yes, you can short sell a San Diego house in probate. We’ve done this successfully for many clients, and it’s a good idea.

Short selling before the estate is settled can be a helpful tool, especially if the estate or the heirs are struggling to keep up with mortgage payments. If the house is to be sold, it’s better to get it done quickly rather than pour estate or family resources into a house that’s upside down.

And – getting it “over and done with” can prevent the estate from exposure to a collections lawsuit on HELOCs and other junior lien holders should the first mortgage foreclose.

A San Diego short sale during probate is simply a smart way for an estate to make sure that they’ve cleaned up any lingering liabilities.

If you’re already draining bank accounts for this purpose, or if payments have already been missed, click here to learn about the Cash Short Sale Express program.

In addition to protecting the estate from liability, short selling now while there is but one executor to sign the paperwork can be much easier than waiting until two or more heirs would need to come into agreement. As it turns out, a short sale is often more streamlined when the debtor is deceased.

No two San Diego short sale situations are exactly the same, so we’d be glad to meet with you and discuss the best course of action for your specific situation. Just click here to fill out the short sale information request form, and we’ll be in touch.

You can also reach the HaroDunlap Team by writing info@harodunlap.com or by calling 619-299-HARO.

This site provides information about real estate, law, income taxes and credit scores as relates to borrowers in distress, short sales and similar situations. The site is designed to help users safely cope with their own needs. Information is not the same as advice — the application of law or regulations to an individual’s specific circumstances. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a lawyer, tax adviser or other specialist if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation. The models in photographs accompanying the testimonials on this website are used for illustrative purposes and are not a personal endorsement.